WASHINGTON, Sept 28 (Reuters) - JPMorgan Chase & Co (JPM.N) has begun preparing for the possibility of the United States hitting its debt limit, Chief Executive Jamie Dimon told Reuters on Tuesday, adding he nevertheless expected policymakers to find a solution to avoid that "potentially catastrophic" event. The country"s largest lender has begun scenario-planning for how a potential U.S. credit default would affect the repo and money markets, client contracts, its capital ratios, and how ratings agencies would react, Dimon said in an interview. "This is like the third time we"ve had to do this, it is a potentially catastrophic event," he said. "Every single time this comes up, it gets fixed, but we should never even get this close. I just think this whole thing is mistaken and one day we should just have a bipartisan bill and get rid of the debt ceiling. It"s all politics," he added. Congressional Democrats are scrambling to find a way to raise the government"s $28.4-trillion borrowing cap before the Treasury Department runs out of means to service the nation"s debt. Treasury Secretary Janet Yellen has said the Treasury will likely exhaust extraordinary measures by Oct. 18. Democrats have prepared votes to head off a government shutdown and a potentially economically-crippling U.S. credit default on Tuesday, but a quick resolution appeared unlikely in the face of continued Republican resistance. Fiscal brinkmanship has become a regular feature of U.S. politics over the past decade thanks to ongoing partisan polarization, with debt ceiling deals coming down to the wire in 2011 and 2017. Bloomberg reported last week that Secretary Yellen had called the leaders of the biggest Wall Street financial firms to recruit them in her campaign to pressure Republicans to agree to a deal. The Treasury declined to comment on the report. Dimon said as part of its preparation the bank was combing through its client-contracts, a resource-intensive process. "You"ve got to check the contracts to try to predict it out ... If I remember correctly, the last time we got prepared for this, it cost us $100 million," he said. RACIAL EQUITY Dimon was speaking to Reuters before a ribbon-cutting ceremony at the bank"s new branch in southeast Washington, part of JPMorgan"s effort to promote racial equity by boosting its presence in underserved communities. The branch is the eleventh of its kind JPMorgan has opened in cities including New York, Detroit, Los Angeles and Chicago, since 2019. As well as providing traditional services, the branches work with local community groups to provide free skills training and other small-business support. "It"s not a traditional bank branch, we want it to be very welcoming, we want it to be attractive," said Dimon. Following nationwide "Black Lives Matter" protests last year, JPMorgan pledged $30 billion over five years to advance racial equity. That includes originating 40,000 new mortgages and 15,000 small business loans to Black and Latino communities. The investment underscores how large corporations are increasingly embracing social, environmental and governance or ESG issues amid pressure from investors. Addressing racial equity is also a priority for President Joe Biden"s administration which has said bank branch "deserts" perpetuate inequality by reducing access to credit. Biden"s acting Comptroller of the Currency Michael Hsu this month said he would scrap contentious changes to fair lending laws led by his Trump-appointed predecessor and start a fresh review with other banking regulators. Rules around the Community Reinvestment Act, where regulators score banks on how well they serve poor communities, need to be regularly modernized to account for technology-driven changes in banking, said Dimon, who said the overall law is good for the country. "It is very complicated, very slow, very late, very hard to measure," he said, adding CRA assessments should also be performed in real time, as opposed to a retrospective review every few years. "Does it actually capture everything? No. Is it real time? No. Is it politicized? Absolutely." Reporting by Pete Schroeder, writing by Michelle Price; Editing by Nick Zieminski Our Standards: The Thomson Reuters Trust Principles.